Bulldogs Rugby League Club

Introduction

The case Bulldogs Rugby League Club & Anor v Williams & Ors[1] gave the situation to the court to consider the doctrine of restrain of trade under common law and the Restraints of Trade Act 1976 (NSW).[2] In this analysis, it will identify the relevant issues and ratios based on the relevant facts in this case, and critically analyse the court's decision.

Facts and Issues

The first defendant, Sonny Bill Williams had signed up a five years contract with the plaintiff, Bulldogs Rugby League Club Ltd in 2007. Williams agreed to the clauses included subclause 3.1(t), which is the player restrained participating in any other football games of any code without the prior written consent of the Bulldogs. In July 2008, Williams and the second defendant (Toulon Rugby Club) entered into a contract that Williams would represent this French club to participate the competition for 08/09 season. And Williams played a trial game on 8th August for Toulon in the same year. The plaintiffs sought an injunction prohibiting the first defendant representing Toulon to play.[3]

To determine whether this injunction could be granted by the court, the major issue for the court to consider is whether the restraint was effective and necessary to protect the interest of those parties whom in favour of these restrictions.[4]

Ratio Decidendi

1. A basic principle is mentioned by the Court, the sanctity of contract. The party should be enforced to undertake the obligations agreed under the contract.[5] As an employment contract between these plaintiffs and defendants, the obligation of defendant should be enforced.

2. The general rule from Lumley v Wagner was also used by the court, if the contract is for the provision of “special services”, the promise by contractor that he does not to work for a competitor should be enforceable.[6]

3. The restraint of trade would be reasonable, if it protects the employer's legitimate interests and is not injurious to the public.[7] This is the central principle applied in this case.

Analysis and Evaluation of the Decisions

To determine whether this restriction is valid, first thing to be considered is whether the employer has the interest need to be protected.[8] The restraint must go no further than is necessary to protect that interest of the party.[9] In this case, the court indicated some reasons the plaintiffs sought for an injunction: to prevent injury to the player, the importance of promotion of Mr. Williams for the recruitment strategy and the value of “star attraction” created by Mr. Williams for the Bulldogs etc.[10] These terms affected by Mr. Williams are related to the actual interest of the plaintiff.

Another reason to support the reasonableness of this restriction which considered by the court is the sanctity of contract.[11] From the principle in Doherty v Allman, the person whom undertakes a considered obligation under the contract should be enforced to carry out the obligation.[12] In this case, Mr. William should be enforced to undertake this considered obligation by the contract.

A general rule about “special services” is also used by the court. As the rule states that “if the contract involves providing special services, the promise not to work for a competitor will be enforced.”[13] Under this situation, Mr. William agreed to present the Bulldogs to participate the rugby competition. This would be the agreement of providing special services. Therefore, the promise for Mr. Williams not to work for a competitor should be enforced. Furthermore, he negotiated with the Bulldogs under the freely and fair circumstance.[14]So far as this, the bargaining is fair between both parties. From the different aspects of the arguments above, the plaintiffs have the interest needed to be protected.

Secondly, the court needs to consider whether this restraint is not injurious to the interest of public. The general rule indicates that every person has the right to trade freely, any trading behaviour interference with individual liberty is contrary to public interest.[15] However, there are some exceptional circumstance exist. In NSW, “restraint of trade is valid to the extent to which it is not against public.” stated by the s 4(1) of the Restraints of Trade Act 1976 (NSW).[16] In the case, the balance of convenience was taken by the court to determine. The bulldogs would keep their promise to continue paying Mr. Williams payment under the contract, which is the obligation the plaintiff need to be fulfilled.[17] Moreover, the defendant had the freedom to earn a living, although he was under that restriction.[18] Even if the injunction is granted, he also has the opportunity to work for the plaintiff.[19] After analysing these issues, it has figured out that the defendant had the freedom to order his affairs for his own and public interest.[20] Therefore, the restraint would not be injurious to public interest. It would be reasonable to grant an injunction by the Supreme Court.

Commercial Significance

In this case, the court illustrated what extent for the restraint of trade clause is reasonable. As the matters of such employment contracts are complex, the businesses should thoughtfully think about whether the extent to provide a restriction under Restraint of Trade Act is effective.[21] However, this doctrine may used by the employers to restrict their employees' freedom at some points. Thus, the employees should be carefully to consider the impact of the restraints when they enter the contracts. In addition, the doctrine of restrain of trade is significantly used in protecting the confidential information for the businesses. Like the case Woolworths Limited v Olson & Anor, for example, the plaintiff successfully appealed an injunction to protect their interest in case of disclosure of their confidentiality.[22]

Conclusion

The decision in Bulldogs Rugby League Club Ltd & Anor v Williams & ors affirms that the restrain of trade would be reasonable and enforceable if it protects the legitimate interest of employers and it not injurious to the interest of public.[23] Furthermore, if there is a contract for provision of services, the promise not to work a competitor would be enforced.[24]
References

William, K. 2009, ‘Enforcing restraint clauses: how competitive must the competitor be?', Commercial Law Quarterly 3,vol. 23, no. 3, pp. 3-5.

Catanzariti J. 2008, ‘Terminating a fixed-term contract', LAW SOCIETY JOURNAL, p44-45

Johnson, J. 2009, ‘Restraint of Trade Law in Sport', [Online], Available: http://epublications.bond.edu.au/cgi/viewcontent.cgi?article=1009&context=slej [12 May 2010]

Woodward, J. 2010, “What do I need to include in an effective restraint of trade clause in an employment contract..?” [Online], Available: http://www.turnbullhill.com.au/articles/what-do-i-need-to-include-in-an-effective-restraint-of-trade-clause-in-an-employment-contract---.html [13 May 2010]

Case List

Bulldogs Rugby League Club Ltd & Anor v Williams & ors [2008] NSWSC 822

Curro v Beyond Productions Pty Limited (1993) 30 NSWLR 337

Doherty v Allman (1878) 3 App Cas 709 at 720

Fender v St John-Mildmay [1938] AC 1 at 36

Lumley v Wagner (1852) 1 De GM & G 604

Nordenfelt v Maxim Nordenfelt Guns & Ammunition Co Ltd [1894] AC 535

Restrains of Trade Act, 1976 (NSW) s 4(1)

Vancouver Malt and Sake Brewing Co v Vancouver Breweries Ltd [1934] AC 181

Woolworths Ltd v Olson [2004] NSWCA 372

Research Plan

1. Analysing the question

Style of assignment - An analysis of a case

Length of assignment - 1000 words

Key concepts - restraint of trade, law of contract

2. Currency of material

All date references can be used in analysing this case.

3. Types of References required

University Database: Casebase, AGIS Plus Text and Firstpoint

- Journal articles, books, newspaper articles being found in these articles are required.

[1] Bulldogs Rugby League Club Ltd & Anor v Williams & ors [2008] NSWSC 822

[2] Restrains of Trade Act, 1976 (NSW)

[3] Bulldogs Rugby League Club Ltd & Anor v Williams & ors [2008] NSWSC 822

[4] Restrains of Trade Act, 1976 (NSW) s 4(1)

[5] Doherty v Allman (1878) 3 App Cas 709 at 720

[6] Lumley v Wagner (1852) 1 De GM & G 604

[7] William, K. 2009, ‘Enforcing restraint clauses: how competitive must the competitor be?', Commercial Law Quarterly 3,vol. 23, no. 3, pp. 3-5.

[8] Catanzariti J, 2008, ‘Terminating a fixed-term contract', LAW SOCIETY JOURNAL, p44-45

[9] Johnson, J. 2009, ‘Restraint of Trade Law in Sport', ePublications@bond

[10] Bulldogs Rugby League Club Ltd & Anor v Williams & ors [2008] NSWSC 822

[11] Fender v St John-Mildmay [1938] AC 1 at 36

[12] Doherty v Allman (1878) 3 App Cas 709 at 720

[13] Lumley v Wagner (1852) 1 De GM & G 604; (1852) 42 ER 687

[14] Curro v Beyond Productions Pty Limited (1993) 30 NSWLR 337

[15] Nordenfelt v Maxim Nordenfelt Guns & Ammunition Co Ltd [1894] AC 535

[16] Restraints of Trade Act 1976 (NSW) s 4(1)

[17] Bulldogs Rugby League Club Ltd & Anor v Williams & ors [2008] NSWSC 822

[18] Woolworths Ltd v Olson [2004] NSWCA 372

[19] Bulldogs Rugby League Club Ltd & Anor v Williams & ors [2008] NSWSC 822

[20] Vancouver Malt and Sake Brewing Co v Vancouver Breweries Ltd [1934] AC 181

[21] Woodward, J. (2010), “What do I need to include in an effective restraint of trade clause in an employment contract..?”

[22] Woolworths Limited v Mark Konrad Olson [2004] NSWCA 372

[23] Restraints of Trade Act 1976 (NSW) s 4(1)

[24] Lumley v Wagner (1852) 1 De GM & G 604